This quarterly update presents Aurora’s comprehensive view on the state of the German power market, and includes our latest outlook on prices, generation, capacity, and asset performance to 2035.
Key highlights this quarter include:
- The German baseload power price is forecasted to increase from 42 in 2018 to 51 EUR/MWh by 2025, then rise to 61 EUR/MWh in 2030 and 68 EUR/MWh in 2035. Compared to our April report, power prices are higher up to 4 EUR/MWh higher in the near to medium term. After 2029, the July forecast is 1 EUR/MWh lower than the April report.
- The higher price timeline in the short term is driven by the recent recovery in carbon and gas prices. The lower forecast in the later years is driven mostly by minor changes in neighbouring countries, especially updated renewables capacity timelines.
- Carbon has increased following the Phase IV reform of the EU ETS and the strengthening of the Market Stability Reserve. From 2018 to 2029, EUA prices are 45% (5.0 EUR/t) higher than in our Q1 2018 forecast, driven by greater investor confidence in the long term price of carbon.
- Higher futures caused by higher Asian demand led to gas prices being 8.4% (1.5 EUR/MWh) higher in the period to 2022, with Groningen production cuts and Dutch demand side reforms causing gas prices to be 1.1% (0.3 EUR/MWh) higher from 2023 to the end of the forecast.
- We continue to expect a gradual coal phase-out in Germany by 2040 in our Central scenario. As in our April forecast, we treat the 65% renewables target specified by the coalition as a scenario as opposed to our central view, as there is continued uncertainty in its adoption.